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If you have credit card debt and good credit, chances are pretty high that you’re wasting money on interest.

Just how much you’re wasting will vary tremendously based on your interest rate and average monthly balance, but here are a few numbers to reflect on:

A person who carries an average balance of $1,000 a month on a credit card with a 12% interest rate will spend $120 a year on interest. A 12% rate on $5,000 of credit card debt costs $600 yearly. Ouch.

If the interest rate is 16%, carrying an average monthly debt of $1,000 will cost $160 a year. And $5,000 – that will cost $800. DOUBLE OUCH!

Despite the fact that credit card debt is astoundingly costly, it is easy to overlook the big ticket headline yearly cost when interest expenses are spread around a couple of credit cards. It may only be $15 a month here or $15 a month there, but when added up and multiplied by 12 months, the expense is pretty daunting.

That’s where 0% balance transfer credit cards come into play. We’ve all seen the offers that arrive in the mail and perhaps some believe them to be too good to be true. They are not.

0% APR balance transfers are essentially the only free lunch in the credit card world. Nevertheless, they are not a magic cure for credit card debt. Instead, they are more like an extremely powerful tool that can be used to save money on debt that cannot be repaid quickly.

Here’s how you can capitalize on balance transfers.

As a way to prevent credit card debt from growing: While this is not the optimal way to use balance transfers, simply moving debt from a high rate card to one with a 0% APR will result in interest savings. It’s really that simple.

As part of a debt reduction plan: While getting a year-long reprieve from interest expenses is obviously good for anyone’s finances, the best way to approach a balance transfer is with an eye on reducing debt as much as possible during the 0% period. Because there are no monthly interest charges, every payment helps reduce outstanding debt. Thus, the $800 in interest a person with $5,000 of credit card debt at a 16% rate would pay in a year can not only be saved, but used to reduce outstanding debt by 16%.

Ultimately, it is difficult to argue against the benefits of 0% APR balance transfers. At the very least, they can be used to prevent debt from growing out of control. And, if used as part of a debt reduction plan, they can expedite the process of becoming debt free by freeing up cash that would be spent on interest that can instead be used to pay down the principle owed.

———–Jeffrey Weber blogs incessantly about how consumers can save money atSmartBalanceTransfers.com/blog, where he has been Editor and Chief Card Analyst since 2007.

**Make sure to do your homework before signing up to any cards – some are much better than others.